Financial Mathematics. Financial Mathematics is a derivation of applied mathematics that studies the value of money over time, combining the capital, the rate and time for a return or interest, through assessment methods that allow taking investment decisions. Also is known as investment analysis, investment management or financial engineering. Financial Mathematics has proved to be a fundamental discipline in the world of business and banking.
Financial mathematics are(is a)very practical application, their (its) study is closely linked to the resolution of problems and exercises very similar to those of everyday life in the business world.
Basics (basic)concepts to know a few of financial mathematics.
Employers who borrow money must pay interest (I) to the owner or financial institution for using their money. The amount borrowed is the capital or principal (VA or P), the sum of both (capital plus interest) is called the amount (VF),the agreed period for the repayment of the loan is the term (n).
The interest charged is proportional to both the capital and to the period of loan, it is expressed through an interest rate (i).For the economic theory, interest is the price of money. Very good! When only the interest on the principal (This sentence is confused I don’t understand what you want say) , i.e. on the totality of the money borrowed is called simple interest.
Investment goals.
The goal of any investment is to recover the amount invested plus an additional amount, it is called Return on Investment and it will depend on various factors such as risk and interest rate. On the other hand, from any investment project, financing is required, (it) generally tends to be a loan of a sum of money from a financial institution with the commitment of the borrower to repay the same amount of interest. This operation is called financial transaction. Financial arrangements also called the method of calculating the interest rate of a financial transaction.
(The more used regimens) Regimens more used are the simple and compound. Here we will give some examples using simple interest.
Simple interest formula: Interest is the product of three factors, capital (VA), time (n) and rate (i), so we have:
I = VA * n * i This is the formula or equation to calculate simple interest.
Example of application:
1. Calculating simple interest. A company pays 6% on times deposits. Determine (determining) the annual payment for interest on a deposit of CU 18,000. (CU = currency units).
Answer: VA = 18,000.
n = 1.
i = 0,06.
I =?
I = 18,000 * 1 * 0,06 = 1,080.
The company pays annually on this deposit the sum of 1,080 CU.
2. Calculating the period of an investment.
A financial institution 250,000 CU to the 17.6% invested in local mortgages and won 22,000 CU. Determine how long the money was invested. Answer: VA = 250,000; I = 22,000; i=0,176; n =?
I = VA * n * i; n = I / (VA * i)
n = 22,000 / (250,000 * 0,176) = 22,000 / 44,000 = ½
The money was invested for half year.
I conclude that the financial mathematic is very important to estimate several economic aspects of daily life and business world because with them we can obtain greater benefits by making a preliminary analysis of our investments. (I think that the business and personal overcoming becomes simple using financial math).
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Financial Mathematics.
Financial Mathematics is a derivation of applied mathematics that studies the value of money over time, combining the capital, the rate and time for a return or interest, through assessment methods that allow taking investment decisions. Also is known as investment analysis, investment management or financial engineering. Financial Mathematics has proved to be a fundamental discipline in the world of business and banking.
Financial mathematics are (is a) very practical application, their (its) study is closely linked to the resolution of problems and exercises very similar to those of everyday life in the business world.
Basics (basic) concepts to know a few of financial mathematics.
Employers who borrow money must pay interest (I) to the owner or financial institution for using their money.
The amount borrowed is the capital or principal (VA or P), the sum of both (capital plus interest) is called the amount (VF),the agreed period for the repayment of the loan is the term (n).
The interest charged is proportional to both the capital and to the period of loan, it is expressed through an interest rate (i). For the economic theory, interest is the price of money.
Very good!
When only the interest on the principal
(This sentence is confused I don’t understand what you want say) , i.e. on the totality of the money borrowed is called simple interest.
Investment goals.
The goal of any investment is to recover the amount invested plus an additional amount, it is called Return on Investment and it will depend on various factors such as risk and interest rate. On the other hand, from any investment project, financing is required, (it) generally tends to be a loan of a sum of money from a financial institution with the commitment of the borrower to repay the same amount of interest. This operation is called financial transaction. Financial arrangements also called the method of calculating the interest rate of a financial transaction.
(The more used regimens) Regimens more used are the simple and compound. Here we will give some examples using simple interest.
Simple interest formula:
Interest is the product of three factors, capital (VA), time (n) and rate (i), so we have:
I = VA * n * i
This is the formula or equation to calculate simple interest.
Example of application:
1. Calculating simple interest.
A company pays 6% on times deposits. Determine (determining) the annual payment for interest on a deposit of CU 18,000. (CU = currency units).
Answer:
VA = 18,000.
n = 1.
i = 0,06.
I =?
I = 18,000 * 1 * 0,06 = 1,080.
The company pays annually on this deposit the sum of 1,080 CU.
2. Calculating the period of an investment.
A financial institution 250,000 CU to the 17.6% invested in local mortgages and won 22,000 CU. Determine how long the money was invested.
Answer:
VA = 250,000; I = 22,000; i=0,176; n =?
I = VA * n * i; n = I / (VA * i)
n = 22,000 / (250,000 * 0,176) = 22,000 / 44,000 = ½
The money was invested for half year.
I conclude that the financial mathematic is very important to estimate several economic aspects of daily life and business world because with them we can obtain greater benefits by making a preliminary analysis of our investments.
(I think that the business and personal overcoming becomes simple using financial math).